Article

The Paradigm Shift To Accountability: When Is The Time To Start A BDC?

March 2008, Auto Dealer Today - WebXclusive

by Glynn Rodean - Also by this author

I’m told that in the early 70’s, finance offices were not in every dealership. They were just beginning to pop up here and there. Today, almost every dealership has a finance department that is responsible for their own production separate from the sales department. A similar thing started happening a few years ago with Internet departments. Now many dealerships have Internet departments separate from the traditional sales staff. Today, business development centers (BDCs) are in the same evolutionary realm. At what point should your dealership make that paradigm shift? That depends on your motivation.

Several factors motivate dealers to implement a BDC. Some of those factors include their customer base, sales lead volume, advertising dollars spent and basic trust. Any one of these factors by itself may be enough to drive you to invest in a BDC, but when you combine the force of the four factors, it usually becomes a question of why haven’t you already implemented a BDC, not a question of should you implement in a BDC.

Motivator #1 – Effectively Mine Current Customer Base
It’s no secret that it is easier to retain a customer than to acquire a new one, but does your dealership have a systematic process of staying in contact with your customer database? More importantly, does your dealership have a set procedure for contacting specific demographics within your customer database? For example, if Chevrolet releases a new incentive on Tahoes, do you have a process to facilitate contact with Tahoe owners whose vehicles are two or more years old? How about Trailblazer owners that might want to upgrade? Maybe even customers who have purchased used Explorers in the last three years are ready to purchase again. 

If you have a BDC in place, you can contact all of these customers to set appointments for your sales staff without any additional advertising expense. In fact, letters expressing potential equity in their vehicles can develop an extensive response with appointments that show and sell.

What about customer follow up? Are you one of only a handful of dealers who can honestly claim their sales staff does follow-up effectively? Only about 10 percent of salespeople are outstanding at customer follow-up, yet most dealerships relegate customer follow-up to the sales person. A BDC can conduct the proper follow-up to keep your dealership at the forefront of every customer’s mind, while asking for referrals. This keeps your sales staff doing exactly what you hired them for – selling vehicles.
 
Motivator #2 – Effectively Handle Sales Lead Volume
I hear many dealers complain about lead volume. I also hear trainers explain to dealers that it is not about the volume of leads received, but what you do with each lead. How are your leads handled? Is every lead handled professionally with the intent to set an appointment? Dealer principals I speak with would like to say that every lead gets the same attention, but in reality, few dealers can say that truthfully. The attention a lead receives is generally proportionate to the need and desire of the individual handling the lead on that specific day.

A BDC ensures that every lead, regardless of its source, will receive the same level of non-prejudicial professionalism. Each lead is contacted with a single goal in mind: set an appointment for the customer to come to the dealership.

Motivator #3 – Effectively Spend Advertising Dollars
The more money you spend on advertising each month the more accountability you need. Incoming call sourcing is just one piece of ad dollar accountability. Incoming call tracking allows you to know how you generate incoming call activity, not what you do with that activity. A BDC makes outgoing calls on your behalf and tracks not just the lead source, but appointments kept and ultimately sales.

Knowing how you are generating sales from ad dollars spent and the cost of those sales will allow you to quickly adjust your expenditures. For example, in the chart below, Ad Source 2 had a very high percentage of shows to leads; however, a very small percentage of those shows converted to sales, which makes it the second highest in ad dollars spent per sale. With this type of information, you can make informed decisions on where to spend your advertising dollars.

Ad Source Analysis

Dollars Spent Total Leads Cost per Lead Total Shows Units Sold Total Gross  Ad $ Per Sale
Ad Source 1  $5,000 500 $10.00  200 18  $36,577  $278 
Ad Source 2  $2,500 40 $62.50 25 3 $8,027 $833
Ad Source 3  $2,000 100 $20.00 15 3 $12,020 $667
Ad Source 4  $800 80 $10.00 40 7 $22,094 $114
Ad Source 5 $5,000 20 $250.00 10 4 $2,880 $1,250
$15,300 35 $81,598 $437

Motivator #4 – Trust

While the above factors all are important, the main determining factor in deciding if you need a BDC is trust in your salespeople. Do you honestly believe that your salespeople will call every lead and follow-up with every customer regardless of how they feel the chances of a sale may be? A BDC does what your sales staff won’t or can’t do – follow up calls, referral seeking, owner base mining and keeping your dealership in the forefront of every customers mind.

How many of these motivators do you need to motivate you to increase profits? A successful BDC can grow with your dealership. It is possible to start small with one person and grow. What it takes is a foundation of commitment, processes and skills—not scripts.

Vol 5, Issue 2

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